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Inside Job at Russia Insider: Fresh Allegations of Fraud

April 5th, 2017 - Fort Russ News -

Fort Russ Editorial Team

On April 11th, 2016, Fort Russ featured an exposé on a number of serious allegations of fraud and impropriety at Russia Insider (RI) - a crowdfunded platform for news out of Russia, in English. Since the 2016 FR exposé, several other former employees of RI have come forward to confirm the allegations and present new information.

Besides the Bausmans, who are these people? While this may include some individuals who may have in the past contributed something of some kind at some point; the fact it remains on the website is confusing at best, and misleading at worst. Which one is Rudy Panko?

These new allegations stem from the period of our last report, through February 2017, when our latest investigation began. The Fort Russ editorial team had previously considered developing a rejoinder to the, we believe, failed attempt of Mr. Bausman to assuage readers through several oddly placed (they were not run on RI) blog entries. We ultimately decided not to, because of the lack of falsifiable evidence presented in these blog entries (they were empty or vague statements). However, given the fresh allegations coming in part from new sources, we will also include a brief examination of the insufficiency of Mr. Bausman's attempts to placate readers' concerns.

At particular issue now is the fact that Russia Insider continues to claim that 100% of its revenues from crowdfunding goes to journalists. When looking at RI's site, there appear to be some dozen or so original writers - writers we are made to believe, that is, actively led to believe, are being supported through the crowdfunding endeavors.

Our sources, however, have confirmed that in terms of article writers, RI is (or was, through the month of February and early March when our information was collected and due diligence was applied), down to its last one or two writers, one of them being Riley Waggaman. That is, according to our sources, who also verified each other's claims, Waggaman and perhaps another individual, are using upwards of a dozen or so 'pen names' for reasons which any reasonable person might surmise.

To be clear, it is of course entirely possible that 100% of all the crowdfunding money goes to Waggaman, though this strikes us as unlikely given the sums raised versus independent journalists' salaries in modern Russia.

Our sources have chosen to remain anonymous, citing Bausman’s allegedly vindictive behavior toward individuals who speak out against the practices of RI.

The Fort Russ editorial team, or any person associated or affiliated with Fort Russ, did not solicit or actively educe any of the statements which we were given from our sources.

In fact, even once presented with the new information - that Russia Insider was using about a dozen fake journalists' names to apparently cover for the fact that the establishment was down to one or two writers - we deliberated over whether such information was sufficient for a story. The question put bluntly, was 'is conducting and publishing this investigation journalism?'

We answered this by determining two things 1.) Are the statements from credible sources whom we verified indeed worked at RI; and 2.) Is the information we have a matter of public interest?

On both counts, the answer was, and is, yes.

The community of readers who have sought out sources for information, to counter the biases and outright lies and distortions of Western so-called journalism, have a vested interest in honest and accurate information about where their donations are going. If an organization, hypothetically in this case RI, falsely projects a larger-than-reality impression of the size, scope, and assumed costs associated with such an operation, then certainly it is in the public's interest to know if this is a grave possibility, and that former employees have, in no uncertain terms, made these claims.

Is it wrong to use pen-names? We know, for example, that 'Tyler Durden' at Zero Hedge is a pen name. We also know that 'The Saker' is a pen name. What is different here in the case of Bausman's Waggaman who himself uses some dozen or so 'pen names'? In the case of the Saker (a type of Falcon) and Durden (the character from 'Fight Club'), the public in no uncertain terms understands that these are pen names. The team at Zero Hedge and the Saker publish articles under these names, but do not misrepresent, by statements or by omissions of statements, that these are the actual names of two individuals. And of course the obvious point here is that in the case of the Saker and Zero Hedge, we do not have one individual posing as upwards of a dozen.

In an increasingly hostile political climate, one in which the Washington Post wantonly engaged in defamation of any number of websites which it had arbitrarily, and probably illegally, presented to the public as 'Fake News', it is incumbent upon all members of our vibrant and vocal community of readers and activists to police our own.

The stigma of 'Fake News' can damage a publication's reputation, even if these allegations are baseless. But this is much worse if the allegations are true.

Imagine you are trying to establish credibility with a peer, family member, or friend, for the idea that - for example - there was in fact no evidence that Russia shot down MH17 or that in Aleppo, civilians had already largely been evacuated prior to the final push to liberate the city. Imagine now that you have shared a version of these important items which appeared at Russia Insider, and your peer (etc.) discovers that the author of the story is not even a real person. Has this transformed a real news story into a 'fake news' story? Perhaps. But what is inarguable is that the practice of using many fake names to, we must assume, cover for the reality of a small and shrinking staff, certainly creates the perception that any journalism and news claims made by such publication are dubious at best.

There is of course a big difference between either fake news or misrepresenting the name of a writer to simulate multiple journalists on the one hand, and getting a story wrong on the other. Every publication has gotten a story wrong, even a glaring error in the headline, which got past copy editing and fact checking. What matters is that this was acknowledged and a retraction or correction printed. Mistakes and errors are hardly misrepresentations, and do not make for 'fake news'. We ourselves have made errors, and we graciously were made aware of these by, yes, our own dedicated readers.

Since its launch in 2014, RI marketed itself as ‘grassroots, citizen journalism’, giving what was tantamount to false hope to their Western audience. This is an audience which, having been stuck behind the veil of Western corporate media, reached into their own pockets to see this project come to fruition.

The Fort Russ (FR) exposé of April 2016 was based in part on the revelations of one of RI’s founders, RT's Peter Lavelle, who at the time held a minority share of the business. Lavelle alleged fraud, impropriety, and a lack of transparency on the part of RI owner and Editor in Chief, Charles Bausman. At that time we also spoke to several former members of the RI team.

It was posited that between the periods of 2015 and 2016, RI had fundraised, through various crowdfunded platforms, between $60,000 and $100,000 – funds which, as our investigation revealed, were not properly accounted for. The FR expose largely criticized RI for taking on the role of a 'content aggregator' site, which reproduced news stories taken from other various websites sympathetic to Russian foreign policy. The issue therein was that readers were asked to donate money for this content, which was already readily available elsewhere for free. This represents not only an instance of purposefully deceiving donors, but an insult to other resources, such as Fort Russ, which works hard on a daily basis to produce original content. It also taints the very practice of crowdfunding which remains a crucial resource for really independent media.

Mr. Bausman’s response to the allegations and measures taken to rectify the situation have been somewhat dubious. The Moscow-based Awara Group consultancy firm was approached to carry out a statement of accounts audit report for Insider Media LLC. This Limited Liability Company is registered in the United States, so it is unclear which set of government standards were used by the Russian company to ‘audit’ the LLC.

Broadly speaking, an audit is the examination of the financial report of an organization by someone independent of that organization. A financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes. The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organization at a given date.

The claims in the report appeared to be unsubstantiated testimonials. For example:

"In the first crowdfunding the company committed to spending the revenue ($31,523) entirely on journalists’ salaries. They fulfilled this commitment, paying in excess of this amount to writers over the next 6 months."

But how many writers were there in the said 6 months?

No response was received upon requesting this information from the Awara Group. For over a week, we received neither a response, nor any confirmation that our request was received via email. With even a basic understanding of the relationship between corporate governance, legality, and transparency, it is clear that no certified accountant can realistically sign off on this information as officially audited accounts, should they be presented to shareholders at an Annual General Assembly and subsequently deposited with tax authorities or registrar’s office of the relevant country. Our own legal advisor explained that this 'audit' does not meet the standard of due diligence, but also noted that it did not appear intended to meet such a standard. Rather, it seems likely that the hastily made report was intended to satiate questions from concerned (and now, likely former) readers.

The ‘audit’ provided by the Awara Group reads more like a friend of RI doing a favor by drafting a blog post in relation to an equity dispute.

In fact, no such 'audit' had been performed before our original article exposing the allegations of fraud and mismanagement at RI, and no such audit appears to have taken place since. To wit, the 'audit' appears as a response to our original investigation.

We are left with the conclusion that the audit was probably intended to simply placate the readers of RI. Does this present the perception of due diligence on the part of RI? Of course not.

The RI website consistently claims that 100% of the crowdfunded proceeds go to 'journalists' - but who are these Russia Insider journalists? The noun may be being wrongly used in its plural form.

A further search on Google and Social Media for other RI “authors” has shown no sign of such individuals on the internet. Furthermore, RI publishes some articles under "RI Staff" and others under "RI Editorial Board." These categories insinuate a team effort, yet nowhere is there a definition of which individuals would account for these teams, and if at all, one differs from the other. Given what is known to Fort Russ, it would be logical to suppose that these categories are fictional and that the quantity of individuals employed is deliberately misrepresented at Russia Insider.

Moreover, the discrepancy does not end with nonexistent writers and financial fraud, but directly translates into a question of honesty and values. For example, Russia Insider claims to be "run by no-nonsense conservative Christians", as shown below.

This statement of outlook and values is directly contradicted by one of its only real personalities, Riley Waggaman. While deputy editor and perhaps one of the only truly existent writers, Waggaman has previously published a compilation of gay pride photos adorned with captions such as "Who is more handsome? It is impossible to know for sure."

In addition, Waggaman has advertised his meeting with and promoted the first openly gay Jewish - and Zionist -Republican running for President with the following graphic:

The above exhibit represents not only a publicly hypocritical violation of RI's value-based claim that is intended to present its supposedly guiding "conservative Christian" worldview to its readership, but an unsettling expression of support for Zionism. This simultaneously calls into question Russia Insider purporting to be sensibly presenting Russia's position and role in the world. Israel and the Zionist project and lobby associated with US imperialism in the Middle East are directly working against Russia's allies, Syria and Iran, where Russia is physically up against Israeli-backed terrorist groups. Russia Insider's deputy editor's affiliations are therefore hypocritical and inappropriate, the controversy of which is only furthered by the fact that Waggaman himself might very well be one fraudulently reaping donations to an ostensibly "conservative Christian" site.

The implications of this latest revelation of RI’s workings are clear. These bad practices pour fuel on the fire of “Fake News” hysteria waged against independent news and analytical resources, and supply more ammunition to Western MSM crusades alleging “Russian propaganda” spread by corrupt individuals and nebulous “trolls”. In the final analysis, not only does this threaten honest audiences with disillusion and disappointment, but it taints the entire mission of creating accountable new platforms by, of, and for people concerned about bridging the gap between media and reality. In this time of emerging new initiatives dedicated to shedding light on and bringing to an end the practices and deceit of big corporate media, the very inside of Russia Insider, as it has been explained to us by its own insiders, appears to be keeping readers and journalists behind in the dark.